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Dwyer: 2012 Target on S&P is 1575

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    Canaccord Genuity senior managing director Tony Dwyer gives his outlook for the markets.

  • Duration 3:50
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High touch back in April but my next guest is Terry bullish saying stay the course in these rough seas he is predicting yes if you -- federal -- more than 20% from today's levels.

And close the year -- 1575.

-- -- Tony Dwyer chief equity analysts that they're managing director.

Canaccord continue.

1278 where it is about now to 1575.

Ultimately -- always does and that's that the direction of earnings we found that over the history of the market.

And and you really during periods like this have to go to your five -- mine are five core tenets and that is the market is driven by is most closely correlated to the direction of earnings.

That's driven by economic activity that's driven by steepness of the yield curve and availability and money.

That's driven by fed policy and that's driven by core inflation.

All of those influences even when you get these you know we had a 12% run into the beginning of April and -- -- now -- 10% decline in we've given it all back.

You know -- extraordinary moves -- there's a lack liquidity in the market but at the end of the day and it's unfortunate the same mistake we made last year so far.

And that is were following the direction of earnings we thought there'd be a correction a little bit further than we thought.

Now the financial analyst Gary shilling.

Also notable for being a bee -- that might jog people's memories or impressions of Gary he ticket agents call for S&P 800.

So we're seeing such a wide range of forecasts.

For equity markets doesn't to a certain degree that Tony suggest that people just kind of I don't know what to expect.

Well I think over the cut dissent says what are traders -- outfit.

If you ask me what the next take is going to be I have no idea I think over the next couple weeks a couple of months it's going to be higher -- -- that kind of environment is very answered however.

On a more intermediate term basis and why have a 57 fat target.

His I don't think it is that -- I think mister Schilling is the only -- you get to 800 is nets of collapse in earnings nearly a massive collapse in earnings.

As if you go into a severe recession -- yet that's thirteen or fourteen multiple on trailing twelve multiple on forward earnings you have it's not about.

The valuation the market is too rich at say US to have a collapse in earnings to get they're not only do not think you're gonna have a -- -- earnings again.

This assumes that the eurozone doesn't blow up right it as long as you don't get a collapse -- that you're gonna have positive earnings which ultimately stocks of us.

On well there's no guarantee we're not -- if you collapse because the news looks quite grim especially Spain coming to a head here.

You -- the uncertainty but you also write it learns that you're talking fundamentals to talk about specifics and I actually agree with you but you got a market sentiment.

Consumer confidence in how we perceive things all of these headlines from them and that's really nervous so how does that factor while I know how -- is -- your outlook but.

How do you think considering it enough I'd.

I think -- it but this is where we've got -- we've got to learn from our past mistakes and I'm speaking for myself okay when everything looked great.

And earnings were -- terrific and all the economic indicators were trending higher and sentiment was more bullish what was that -- that would be in the peak in April.

Today we think that they entire global financial system's gonna fall apart.

The ten year note yield destruct hundred basis points over the course of the last two months that's like that's like a hundred basis points of fed rate cuts because they're ended zero OK long and has -- that much is there stimulant so -- I put my money.

I -- like you're out of defensive sectors -- our view way and again we cut back to consumer discretionary about a month ago little more than that we've downgraded because again.

Mark was too extended energy prices were high and with that there's going to be a correction at this point because of the drop in the ten year note yield.

You wanna buy those sectors that have positive exposure to lower interest rates and lower commodity especially energy -- they would be.

Of course consumer discretionary financials are consumer discretionary information technology financials and industrials to a lesser degree.

Tony Dwyer a fantastic chat this happening thanks so much everyone really -- your aunt hooking your forecast works out.

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